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Buoyant economy has positive implications for the watch & jewellery industry in the region.
According to a recent report published by Shuaa Capital*, the leading investment banking institution in the Middle East, the GCC countries continue to demonstrate a strong economic showing as evidenced by the strong numbers. The following is an overview of the economic numbers and their short & long-term implications. Specifically, three GCC countries, Qatar, Kuwait and the UAE were top performers and reported good performance indices.
Qatar:
The Shuaa Economic Bulletin said that the State of Qatar?s GDP stood at Qatari Riyal (QAR) 51 billion (USD $ 14 billion) in current prices for Q3-2006. The GDP increased to QR 51 billion versus QAR 48 billion (USD $ 13.15 billion) and QAR 45 billion (USD $ 12.33 billion) for Q2-2006 and Q1-2006 respectively, the data revealed. Oil & gas, the main contributor to the economy stood at QAR 32.6 billion (USD $ 8.93 billion) representing 64 % of the GDP value, against QAR 23.9 billion (USD $ 6.55 billion) for Q3-2005 or 61 % of GDP for that corresponding period.
Kuwait:
According to the National Bank of Kuwait?s (NBK) report, the country is expected to generate its second-largest budget surplus on the back of record oil revenues. Kuwait is forecast to post a Kuwait Dinar (KWD) 4.5 billion (USD $ 15.57 billion) surplus as oil revenue reaches KWD 14.1 billion, NBK said. The sate-run Kuwait Investment Authority, which invests the country?s petrodollars has assets estimated at USD $ 100 billion.
UAE:
Business Monitor International issued the following macroeconomic forecasts for the UAE for the period 2006?2007.
| Parameter | 2006 | 2007 |
| Population (million) | 4.83 | 5.19 |
| Nominal GDP, USD $ billion | 151.02 | 170.74 |
| GDP per capita, USD $ | 31252 | 32905 |
| Budget balance (USD $ billion) | 8.96 | 4.9 |
| Budget balance (% of GDP) | 5.9 | 2.9 |
| Oil production (000 bpd) | 2,700 | 2,730 |
| Oil exports (USD $ billion) | 48.3 | 43.7 |
| Exports (USD $ billion) | 130.0 | 134.92 |
| Imports (USD $ billion) | 78.44 | 86.84 |
| Trade Balance (USD $ billion) | 51.56 | 48.09 |
| Current Account (USD $ billion) | 33.54 | 29.51 |
| Current Account (% of GDP) | 22.21 | 17.28 |
| Real GDP growth, % change y-o-y | 8.3 | 8.7 |
| Forex reserves (gold?USD $ billion) | 25.0 | 26.0 |
Dubai:
Specifically, diamonds, precious stones, semi-precious stones and other precious metals topped the sector list for imports in the Emirate of Dubai with an import value of USD $ 9.4 million. Imports formed the largest part of Dubai?s non-oil foreign trade reaching USD $ 43.2 billion while exports USD $ 62.9 billion.
According to a recent report in Rapaport News, Dubai?s re-export trade recorded transactions worth USD $ 16.2 billion. Diamonds, precious stones and precious metals headed the re-export list with trade worth USD $ 5.2 billion.
Kingdom of Saudi Arabia:
In 2006 The Saudi Arabia?s budget surplus is expected to reach a record SR 257 billion (USD 68.53 billion), hence an increase of 20% over the previous year. According to the National Commercial Bank (NCB), the country?s largest Bank ?Revenues are expected to rise to SR 625 billion in 2006, including SR 560 billion of Oil revenues and expenditure will grow to SR 368 billion.
Overall:
The following economic bulletin, financial data and related statistics for ten Middle Eastern countries, published by Shuaa in their report dated 28 November 2006, underscores the continuity of prosperity and reinforces the healthy financial balance sheet particularly for the GCC countries.
| Parameter (2006 estimate) | UAE | QTR | KWI | KSA | BAH | OMN | EGY | MOR | JOR | LEB |
| Nominal GDP(USD $ bn.) | 150.64 | 51.17 | 93.16 | 328.63 | 15.9 | 35.73 | 104.52 | 62.31 | 14.12 | 20.56 |
| Population (in millions) | 4.95 | 0.85 | 3.17 | 25.26 | 0.74 | 2.6 | 75.44 | 31.95 | 5.94 | 3.61 |
| GDP (per capita USD $) | 30,460 | 60,080 | 29,380 | 13,010 | 21,440 | 13,760 | 1,390 | 1,950 | 2,380 | 5,690 |
| Real GDP % growth | 10.4 | 7.9 | 8.4 | 5.9 | 6.1 | 6.5 | 5.6 | 6.7 | 5.7 | -7.7 |
| Inflation % | 9.0 | 6.7 | 2.6 | 1.7 | 2.3 | NA | 10.9 | 2.7 | 3.7 | 7.0 |
| Trade Balance ($ bn) | 48.2 | 20.88 | 42.01 | 140.3 | 4.02 | 14.44 | -11.46 | -9.49 | -5.58 | -5.66 |
| Current Ac ($ bn) | 26.89 | 12.51 | 45.82 | 103.81 | 2.43 | 7.09 | 2.98 | 0.45 | -2.8 | -2.385 |
| Forex Reserves ($ bn) | 25.5 | 5.7 | 10.96 | 31.39 | 2.91 | 4.9 | 25.44 | 18.2 | 4.83 | 11.78 |
| Oil prdn (000s bpd) | 2,450 | 800 | 2,400 | 9,100 | 220 | 775 | 740 | 0.3 | -- | -- |
Good times for the Watch & Jewellery Regional Industry
This upbeat data bodes well for the regional retail industry and this is further evidenced by the success of the recently concluded 15th edition of Jewellery Arabia 2006, the region?s long-standing, biggest, most widely attended and prestigious industry exhibitions held annually in the Kingdom of Bahrain. Other exhibitions such as the Abu Dhabi International Jewellery & Watch Exhibition (ADIJEX, held from 15 to 19 November 2006) and Watch & Jewellery Dubai (held from 12 to 16 December 2006) have also reported good participation by exhibitors from around the world who see the Middle East as one of the fastest growing areas in the world for the watch and jewellery trade. Not to be outdone, the Gulf States of Qatar and Kuwait are also staging their own annual watches and jewellery exhibitions in the early part of each year.
Other reports emerging form the region also present a positive picture. For example, in a recent Press Release the Gold & Jewellery Group in Dubai, UAE (DGJG) reported that sales for the Emirate?s gold industry rose 7.4 % in November 2006 compared to the same period last year. This indeed marks a resurgence for the industry which is witnessing a comeback following slackening demand owing to high gold prices. ?I think gold is back in fashion and we have seen a growth in Dubai?s gold sales in October 2006 by 25 %,? said Tawhid Abdullah, Chairman, DGJG attributing the surge to the Muslim Ramadhan and the Hindu Diwali holidays. He also noted that Dubai?s gold sales for the fourth quarter are expected to rise 15 % over the corresponding period last year.
Celebrities endorse gold: The appetite for gold in the Middle East is in line with international trends, which is evident from a newly released report authored by the World Gold Council (WGC) which in a recent study has pointed to gold becoming the top choice of celebrities world wide, particularly women. According to the report, major cultural changes in developing societies have influenced women to take up more responsibility for their own appearance and independence in their purchases?a pattern set to continue as the wealth of developing countries continues to grow.
?The emotional attributes and benefits of gold, as well as its practical or financial benefits today play complementary roles to women around the world. The rise in the gold price over the past three years has not only added to gold?s desirability, but has also provided a stronger justification for women to buy jewellery. It has once again reiterated the universal and enduring appeal of the metal,? said Moaz Barakat, Managing Director for the Middle East, Turkey & Pakistan, World Gold Council.
There is renewed optimism among international brands / marketers and local traders with regard to the region?s potential. The resurgence is not restricted to gold and now includes diamonds which is increasingly gaining ground among more and more buyers. Belgium-based rosy Blue, the largest diamond manufacturer for example, is aiming to achieve sales of USD $ 500 million next year after the launch of its branded jewellery collections in the GCC. ?The entire GCC market for diamond is worth USD $ 2 billion and currently our sales in the region is USD $ 250 million. Our sales have gone up by almost 200 % to USD 150 million in 2006. With the launch of our branded jewellery, we expect sales in the branded segment to equal our sales in loose diamonds, said Rosy Blue Chief Executive Officer, Sanjay Dalmia.
According to the Dubai Chamber of Commerce & Industry, the value for trade in diamonds in 2005 was USD $ 6.9 billion. ?The GCC is the third largest consumer of diamond jewellery in the world,? added Dalmia.
IGI Pat:
On a recent visit to the UAE, the chief of the Belgium-based International Gemmological Institute (IGI), one of the world?s leading gemmological institutes, says the swift transformation of the Middle East jewellery trade into a highly regulated market was very laudable
Roland Lorie, CEO of IGI said that traders from the UAE have demonstrated a strong affinity for certification where the quality of diamonds, coloured stones and jewellery pieces is graded and displayed to customers. Many manufacturers, wholesalers and retailers has taken a lead in this endeavour and has, since 1997, organized a series of training and developmental sessions in association with leading gem institutes to educate retailers in diamond grading and industry best practices.
Exclusive brand boutiques, the norm of the day:
The prospects for increased sale of premium watches in the Middle East are also growing rapidly with a growing appetite particularly among customers in the GCC. Several leading brands of watches have opened or are in the process of opening new, exclusive watch boutiques in up-market malls in major cities across the region. Recent cases in point are the opening of a boutique by Harry Winston Rare Timepieces in the Red Sea Port city of Jeddah in Saudi Arabia; the opening of a Blancpain exclusive boutique in the UAE, a Rado boutique in Kuwait, a Leon Hatot outlet in the Sultanate of Oman and a Maurice Lacroix boutique in Qatar to name a few. There is also a rush of new international fine, haute couture watch brands wanting to make their mark in the region. This applies equally to fine writing pens and related writing accessories in a region which has traditionally treasured calligraphy and works of fine art. The top of the league pen brands including Montblanc, Montegrappa, Dunhill, Cartier, Chopard, S. T. Dupont, Girard Perregaux, Tibaldi, Aquila and Caran d?Ache to name a few are all well-represented in the retail network in the region.
Auctions making headway in the Middle East:
Another interesting development in the Middle East is the emergence of international auctions by global auction companies in the region. Recently Christie?s hosted a major international auction in the UAE which included magnificent jewels and jewellery, wristwatches and selected works from sources worldwide.
The two-day auction held toward the end of October 2006 incorporated a superb selection of magnificent jewellery, notably a collection of Jewellery and watches from a notable Royal House as well as a special auction dedicated to jewels by Van Cleef & Arpels who celebrated their centenary this year.
Comprising 317 lots the auction netted in excess of USD $ 20 million. Michael Jeha, Christie?s newly appointed Managing Director for the Middle East stated: ?Once again Christie?s is raising its benchmark in the region by bringing notable works to the Middle East, where a number of residents are avid admirers of exceptional jewels and watches?.
Dubai Gold & Commodities Exchange (DGCX), the first international commodities derivatives exchange in the Middle East, recently commemorated its successful completion of the first year of trading.
It may be recalled that the Exchange was inaugurated on 22 November 2005 by